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VIETNAM: UNDERSTANDING OUR OPPORTUNITY

What you’ll see today… • Summary • An overview of a nation • Economic growth • Population trends • Advertising spending and industry growth • Implications and observations .

Summary Vietnam is a young and developing market. . the economic environment has slowed growth from the optimistic predictions of just a few years ago. displaying many of the signs of strong potential: • A young and vibrant population • Industrial growth and a rising GDP However. But the advertising/communications industry seems ripe for growth as the population becomes more sophisticated in their buying behaviour and increased penetration of new media.

Source: Wikipedia .There is amazing potential here… With a population of over 86 million. Vietnam is the 13th most populous country in the world! • And with one of the youngest populations in Asia .more than half the population under the age of 30.IDC Vietnam is young. they have decades of spending to go… • Vietnam is also one of the world’s youngest markets in other ways having only begun economic reform in 1986 • 1 of the fastest growing IT markets and top ten globally . hungry for growth and exposed to the the progress in other nations which only reinforces their desire for progress.

but now will see about 22. recovery is expected to follow the same pattern. Adams. Hanoi . but will fall short of its initial medium-term plans to grow 7-8 percent per year to achieve the Millennium Development Goals by 2015. the global economic crisis has been slower to Vietnam as we’ve needed to wait until MNC’s reduced their investment level to see an impact.college of economics. PhD . • Trade and budget deficits are high but expected to drop in 2009 Due to the cash economy here (little reliance on credit). but the economic slowdown will enable Vietnam return to single digit inflation. • Vietnam was inflating at double digit rates. • Vietnam was growing faster than the rest of the world.5 percentage points less of GDP growth in the next two years. As such. Source: Susan J.But the shine is starting to dull… Vietnam will remain one of the fastest growing economies in the world. • It is predicted that export growth will weaken. Vietnam National University.

2009 .Emerging Tiger" report. GDP has grown by over 25% • Growth in the highest income segments (A&B) has tripled between 2001 and 2008 And socially. they are ready to grow… • They are one of the world’s most optimistic populations and the first in Asia • And one of the world’s most literate populations .94% Source: TNS "Vietnam. • Since 2006.A closer look at the population While the population is still heavily rural (73%). GDP is growing at a rapid pace.

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to what extent will you look to rural Vietnam areas to drive your company growth? 64% 64% Source: Nielsen Vietnam Business Barometer 2009 .There is optimism about rural growth In the next 12 – 18 months.

A 1st world economy within decades? .

3 % +4 +5% 5% +9 Inflation 2007 2008 +8. . 2007 est. Consumer Confidence. Unemployment. FMCG Growth. 2008 CIA. Inflation.5% Unemployment 2007 2008 2009 5.Despite inflation. 2009) . Nielsen Global Online Survey 2007-8.2 Consumer Confidence 2007 June 08 Nov 08 +2 118 points +23% +4 -11 106 points 2009E +11% +10 -9 97 points •Rank 9th globally •Sources: Wage growth. Nielsen Vietnam Retail Audit.5% Wage Growth 2007 2008 2009 + 11. Vietnam is enjoying growth! GDP Growth 2007 2008 2009E + 8. GDP Growth . 2008-9 HRBS Asia-Pacific Pay Increase Guide 2009 (Survey Period: Jan 6 to Feb 6. .2% 4.1% FMCG Growth 2007 2008 2009 Feb +10 +6. 2007 Economic Intelligence Unit . 2006-2007 data from IMF And CIEC: 2008-2010 IMA Asia Brief December 2008.

HOW IS THIS IMPACTING CONSUMER BEHAVIOR? .

09 . Source: TNS Consumer Confidence Poll – Jan.Shifting priorities Whether it’s the economy or a spending conscious environment. there is an impact on the population’s outlook.

09 . consumers are positive about their standard of living Source: TNS Consumer Confidence Poll Jan.Despite negative trends.

according to the General Statistics Office of Vietnam. In Q1 of this year. retail sales are up by 21.5% in real terms yr-on-yr Source: TNS Consumer Confidence Poll – Jan.“Will you reduce spending this year?” And yet.9% equivalent to 6. 09 .

09 .Where are spending decreases predicted? Source: TNS Consumer Confidence Poll – Jan.

Food price increases is the biggest concern for consumers Consumers’ General Concerns Price increase in daily food Pollution Price increase in petrol Future of my children How to develop own business How to take care of my children Low increase in salary Saving Global economy Nielsen Vietnam Omnibus 2009 Base: All respondents (n= 300) HCM= HN= 150 Q40: To what extent are you concerned about the following? .

How are businesses feeling about the market? Expected changes in consumers’ purchase behavior Categories most affected Total (n=61) Do you anticipate that Vietnamese consumers will change their purchasing behaviour next 6 to 12 months? Which industry do you think will be impacted the most? Source: Nielsen Vietnam Business Barometer 2009 .

do you believe that business conditions in the total market & your industry are more likely to improve or deteriorate? Total Market Your Industry Source: Nielsen Vietnam Business Barometer 2009 .But businesses are expressing confidence in themselves! Over the next 6 to 12 months.

Manufacturers are showing optimism about growth Company versus Industry average growth rate (next 12 months) * Note: IA = Industry Average Source: Nielsen Vietnam Business Barometer 2009 .

how do you anticipate your company's hiring of staff to change? 27% 27% Source: Nielsen Vietnam Business Barometer 2009 .And their hiring plans will help spur economic growth! Over the next 6 to 12 months.

INDUSTRY FORECAST .

Advertising spend breakdown .

Advertising is a growing industry here! .

Online spending (000) is growing! .

Businesses have mixed opinions on advertising growth though… Over the next 6 to 12 months. how do you anticipate your company's spend on advertising to change? 39% 39% Source: Nielsen Vietnam Business Barometer 2009 .

I believe this will also spur the market as advertising standards of quality grow and push many of the low end competitors out of contention. this caution is allowing new entrants into the market such as Beeline (a new mobile telecom) and Zest ( a wireless internet provider) who are aggressively marketing themselves. businesses are displaying caution. .Implications and observations While Vietnam continues to be seen as a high-potential growth market. • Unwilling to risk larger investment the way they did a few years ago • Wary of financial commitments But at the same time.

THANK YOU .

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